Publication: The relationship and impact of microfinance on growth and productivity of microenterprises in Malaysia
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Date
2019-02
Authors
Maisyarah Mohamad Nor
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Abstract
This study examined the impact of microfinance criteria and characteristics of business
on growth and productivity of Microenterprises (MEs) in Malaysia. The study
investigated on micro finance criteria in terms of financial and non-financial give an
impact on MEs growth and productivity. The critical issues arise in the study is the
ability of MFIs and business itself to let their business expand and fully utilize the
sources remain uncertainty. The hypotheses formulated were developed based on the
previous studies that related to this study and from the theories of financial growth,
pecking order theory and also contract theory. There are two dependent variables (DV)
used which are growth (MEG) and productivity (MEP) while, there are nine
independent variables (IV) involved in the study. The IV involved in the study are, Loan
Size (LoanSiz), Loan Duration (LoanDur), Loan Repayment (LoanRep), Loan
Utilization (LoanUti), Service Charge (ServiceCha), Contact with Lender (ContactLen)
and Training (Training) for micro finance criteria while Age of business (BussAge) and
Size of business (BussSiz) have been chosen for characteristics of business. Based on
that, the solid and complete questionnaires are only 199 (41.50 %) of AIM and 277
(57.70 %) of TEKUN. The study was employed a multiple regression method to
identify the impact of explanatory variables on Dependent variables (DV) that are
growth and productivity. The findings revealed that micro finance criteria enhance the
MEs growth and productivity and accept most of hypothesis in the study. In the aspect
of significance, both growth and productivity show a significant sign and contributes to
MEs in Malaysia at 1% and 5% respectively. The study therefore, recommends that
MEs should be linked up with larger financing windows such as SME bank or nongovernment agencies in terms of social capital. It also suggests to Micro Finance
Institutions (MFIs) should give entrepreneurial skills to manage their income and
handle resources efficiently. Apart, the study also perceived that there is a miss-use of
loan among MEs in Malaysia. To the policy makers should adopt some policies that
aimed to the promoting the MEs in market penetration for expand their business into a
growth level. Lastly to the future study, the study suggests to use a longitudinal data
for future research because this method can monitor changes before and after join
microfinance schemes and future research also can make a comparison study between
borrower and non-borrower in term of business growth and productivity. Hence, the
findings of the study s answered the research objectives.